Law Firms
Law firms consider increasing capital contributions by equity partners
Some law firms are considering increasing capital contribution levels, according to a report by Law.com. (Image from Shutterstock)
Some law firms are considering increasing capital contribution levels, according to a report by Law.com.
Jon Lindsey, a New York founding partner at recruiting firm Major, Lindsey & Africa, thinks some firms are considering increases amid economic uncertainty.
“I think firms want to make sure they can meet that uncertainty with all the tools they have,” he told Law.com.
The article cited 2023 figures from Wells Fargo’s Legal Specialty Group. The average capital requirement in the nation’s 100 top-grossing firms was 23% of compensation that year. For the Second Hundred top-grossing firms, the average was about 19.5%. But the percentages vary widely, with amounts of contributions ranging from 0% to 49%.
The averages haven’t changed much over the last five years or so, according to Owen Burman, a senior consultant for Wells Fargo’s Legal Specialty Group, who spoke with Law.com in an interview.
The article listed these reasons why firms may want to increase capital contributions:
• To invest in artificial intelligence technologies, cybersecurity systems and other technology
• To finance expansion into new cities
• To make up lost funds when firms decrease equity partners
• To make partners feel invested in the firm, possibly discouraging them from leaving
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